It’s being widely trailed that the budget will include endorsement of Graham Aaranson’s so called general anti-avoidance rule tomorrow.

So let’s be clear, Aaranson did not propose a general anti-avoidance rule in his study, published last November. As he said:

I have concluded that introducing a broad spectrum general anti-avoidance rule would not be beneficial for the UK tax system. This would carry a real risk of undermining the ability of business and individuals to carry out sensible and responsible tax planning.

In other words he proposed business as usual.

What he did suggest was:

However, introducing a moderate rule which does not apply to responsible tax planning, and is instead targeted at abusive arrangements, would be beneficial for the UK tax system.

One person’s moderate is another person’s extreme. In this case his moderate rule is no such thing. As he says of his plan, it is:

clearly intended to apply only to egregious, or very aggressive, tax avoidance schemes.

He named but one such scheme, and has admitted to me, for I was involved in the discussion leading to his recommendations, that he suspects they will be few and far between.

So yes: the government is introducing a scheme to stop the very worst excesses of the tax planning industry that most people in their right minds never went near. But the normal abuse that ensures the wealthiest in this country will carry on avoiding their liabilities will continue, completely unabated.

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